Oct. 9 (Bloomberg) -- Enron Corp.'s former chief operating officer of global markets, Jeff Shankman, was sued by a New York art gallery for allegedly trying to extort more than $150,000 by claiming a painting he bought was a forgery.

Historical Design Inc., an art gallery on East 61st Street in Manhattan, said Shankman purchased three works of art in November 1997 for $40,000. The gallery said Shankman complained this year that one of them, a gouache painting called ``Les Visiteurs'' signed by J. Lambert-Rucki, was a fake. He threatened to ``go public'' unless he was paid least $150,000, the gallery said in court papers.

``Shankman, a former high-echelon Enron executive and art dealer, maliciously formulated and carried out a fraudulent plan or scheme seeking to extort cash from the plaintiff,'' the gallery said in a complaint filed Oct. 7 in New York State Supreme Court in Manhattan.

The gallery, which is seeking at least $400,000 in damages and other fees, contends the artwork belongs to Enron's shareholders and creditors and that Shankman ``wrongfully took possession of it for his own use and benefit.''

Shankman, who headed trading in markets from commodities to foreign exchange and equities at Enron before its 2001 collapse, started a Houston-based energy hedge fund called Trident Asset Management LLC in 2006 with Andy Weathers, a former trader at CenterPoint Energy Inc.

`Good Value'

He couldn't be reached immediately for comment yesterday. A telephone number listed for Trident was disconnected.

In a 1998 interview with Bloomberg, Shankman recalled that after graduating from the Wharton School's business program at University of Pennsylvania, he took a job at Tiffany's flagship store in Manhattan to meet successful Wall Street people.

``I'm a big art historian, American abstract,'' Shankman said. ``I think I buy art that has good value. I mean, you can't buy Monet now.''

At the time of the interview, Shankman supervised 80 traders moving billions of dollars worth of gas. Enron was then the world's largest energy-trading company before it went bankrupt. He next started Monotech International Inc., a Texas- based building-construction company, before moving on to Trident.

Shankman said in the interview that he aspired to acquire a Bentley Azure, ``an old man's car'' in a ``really obnoxious color,'' he said.

``There's only so much you can know about natural gas and you have to have outside interests,'' he said.

`Worthless Forgery'

Historical Designs claims that in 1997, Shankman had the art shipped care of Enron to a Houston address. The gallery said it hadn't seen the works or heard from Shankman until this June, when he claimed that the Lambert-Rucki painting he'd bought was a ``worthless forgery.''

The gallery said Shankman has his own gallery in Houston and sought and received a dealer's discount when he originally purchased the art in 1997. Historical Designs conducted its own investigation and determined that Enron paid for the art, according to the complaint. Shankman rejected the gallery's requests to examine the painting, the gallery said. Historical Designs said Shankman ``kept increasing the size, amount and the urgency of his demands to plaintiff for IMMEDIATE CASH ONLY.''

Shankman claimed the gallery was ``in the business of selling forgeries,'' and said ``consumers need to be protected'' from Historical Designs, the gallery said in the complaint.

Enron was the world's largest energy trader, with a market value of as much as $68 billion, before it collapsed in December 2001. Once the nation's seventh-largest company by sales, it had a budget of $20 million to purchase art for its 50-story Houston headquarters.

Warhol, Katz

Enron sold its art collection, generating $1.74 million in auctions in 2004. The trove of 48 contemporary works amassed by the company included pieces by Andy Warhol, Donald Judd, and Alex Katz, according to documents filed in U.S. Bankruptcy Court in New York. The art collection was liquidated to help pay more than $67 billion of company debt.

The energy trader appointed an art-selection committee, which included Lea Fastow, former assistant treasurer and wife of former Chief Financial Officer Andrew Fastow. Shankman served on that committee, the gallery said in court papers.

Lea Fastow served a one-year prison term for failing to report income from Enron's off-books partnerships controlled by her husband and was released from prison in July 2005.

Stuart Serota, a lawyer for the gallery who filed the complaint, didn't return a call seeking comment yesterday.

The case is Historical Design, Inc. v. Jeffrey Shankman, 113533/2008, New York State Supreme Court, (Manhattan).

To contact the reporter on this story: Patricia Hurtado in New York State Supreme Court in Manhattan at pathurtado@bloomberg.net.

Last Updated: October 9, 2008 17:35 EDT